Liberalization and re-regulation have brought along major changes in the regulated environment of utility industries, and particularly in the electricity sector. Nonetheless, the impact of these developments exhibits substantial differences. This article analyses the diverging impact of the market for corporate control (i.e. takeovers) on the evolution of the electricity sector in Britain and Spain. Takeovers have been prominent in the restructuring of the electricity sector in Britain. Every single privatised company has been acquired by foreign rivals in a short span of time. The Spanish electricity sector, in contrast, has been unequally exposed to takeovers: changes in ownership at Iberdrola and Union Fenosa were characterised by a friendly transition while Endesa has been acquired by Enel despite the preferences of Spanish policy-makers for the building of national champions. The argument presented in this article stresses the continuing importance of three key national institutions of corporate governance –ownership structures of listed companies; the system of corporate law and its associated voting rights procedures; and the degree of independence of regulatory authorities.
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